SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) *

Transcription

1 SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) * FRANCISCO COMÍN Universidad de Alcalá a RESUMEN Este artículo examina la relación existente entre la naturaleza de las Cajas de Ahorros y su éxito en términos de cuotas de mercado durante el siglo XX. Analiza los factores clave que han posibilitado este éxito competitivo de las Cajas de Ahorros, tales como: su capacidad para promover el ahorro, cooperar con la política económica del gobierno, adaptarse a circunstancias cambiantes, operar en áreas geográficas concretas y cooperar entre ellas. Finalmente, el artículo se centra en el factor men- * Received 04/16/2007. Accepted 09/16/2007. This article is an advance of the main conclusions of a book I am currently writing to be published in 2008 with the title Historia de la cooperación entre las Cajas de Ahorros. La Confederación Española de Cajas de Ahorros, [History of cooperation among savings banks. The Spanish Confederation of Savings Banks, ]. Eugenio Torres Villanueva helped with the investigation upon which I base this book. I consulted the archives of the Board of Directors as well as the historical archives of the CECA; José Manuel Neira heads the latter. I also used Ángel Pascual Martinez Soto, Ximo Cuevas and Francisco Hernangomez s unpublished historical series. Enrique Fuentes Quintana s invaluable comments were a great help as were those of Juan Quintás, Manuel Lagare and Victorio Valle. Pablo Martín Aceña, Ximo Cuevas Eugenio Torres and Ángel Pascual Martínez Soto read the first draft. Their advice was well received and I would like to thank all of them. Likewise, I would like to express my thanks to three anonymous referees whose comments helped to improve this paper substantially. Logically, any mistakes are the sole responsibility of the author. a Departamento de Fundamentos de Economía e Historia Económica, Facultad de Ciencias Económicas y Empresariales. Pza. de la Victoria 3, Alcalá de Henares (Madrid). Revista de Historia Económica 201 Journal of Iberian and Latin American Economic History Año XXV. Otoño Nº 2:

2 FRANCISCO COMÍN cionado en último lugar. Se recurre al modelo de cooperación competitiva para explicar el destacado papel desempeñado por la Confederación Española de Cajas de Ahorros para hacer posible la alianza estratégica entre las Cajas de Ahorros españolas. Palabras clave: Cajas de Ahorros, Bancos comerciales, cooperación competitiva, política económica, Asociación de Cajas de Ahorros, España, Europa. ABSTRACT This paper explores the relationship between the nature of Spanish savings banks and the extent of their market success during the twentieth century. It deals with the key factors which have made such a good performance possible, including their ability to promote private saving, to cooperate with government economic policy, to adapt to changing circumstances, to operate in particular geographical areas, and to cooperate with one another. Finally, the paper deals in depth with this last factor. The competitive cooperation model is used to explain the outstanding role of the Spanish Confederation of Savings Banks in making the strategic alliance between the Spanish savings banks possible. Keywords: savings banks, commercial banks, competitive cooperation, economic policy, savings banks association, Spain, Europe. JEL Classification: G21, N INTRODUCTION From the standpoint of banking history, the success story of savings banks in Spain is virtually unique, not only in Europe, but in the world 1. The fact is that the savings banks are winning market share from the Spanish banks and are just as efficient as the latter 2. The performance of Spanish savings banks is all the more remarkable in that Spanish commercial banks are among the most efficient in the world, as can be seen in their international growth, not only in Latin America but also in the USA and the EU. This article attempts to explain the role of coope- 1 Only the Norwegian savings banks have as successful a record as the Spanish. See Pampillón (1994), Pampillón (2003, pp ). 2 See Pérez (2003, pp ), Pérez and Doménech (1990), Cals Güell (2005). 202

3 SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) ration among savings banks in Spain and the outstanding influence of the Spanish Confederation of Savings Banks (Confederación Española de Cajas de Ahorros CECA ) on the expansion of the market share of savings banks in Spain since the foundation of this body in It is worth studying the case of the savings banks in Spain to investigate the reasons behind their capacity to compete with commercial banks. We now know the business strategies undertaken individually by the main savings banks. In fact, there are numerous, excellent studies of the history of large, medium sized and small savings banks 3. These studies analyse the most relevant characteristics of their performance as both financial institutions and charitable organisations. They also show how the various savings banks developed their areas of activity. However, such studies make little mention of the collective strategies used by the associated savings banks grouped within the Confederación Española de Cajas de Ahorros (CECA). This is a serious oversight as this association was a fundamental instrument for the collective performance of the savings banks. The collective strategy of the savings banks was key, first, to ensure their survival and then later, to reinforce their growth. Therefore, there is a gap in our knowledge of the Spanish financial sector and more specifically in the area of the savings banks. This paper is based on research that aims to fill this gap. The success of the savings banks in Spain was collective because the entire sector gained market share from commercial banks. Some savings banks grew more than others and specific studies show us why. Some merged while others were taken over but none disappeared. We cannot say the same about commercial banks. In the very few cases where savings banks did have problems, the other savings banks used the CECA to rush to their aid. It is therefore important to explain that collective success through their strategy of association. The reputation of each and every Savings Bank depends on the reputation of the sector, so mutual solidarity is fundamental to explain their evolution in the 20th century, especially from the time the CECA was created in In general, the published histories of certain savings banks do not consider ths point. There are also excellent studies that analyse the historical evolution of the savings sector jointly using the aggregate accounts of all of the savings banks 4. These studies do not analyse the collaboration strategy used by the savings banks in depth either. This oversight could be unders- 3 A large amount of space would be required to quote all the studies, so I will only mention the most important ones: Forniés, Torres and Rubio (1976), González Enciso (1998), López Yepes (1979), López Yepes and Titos Martínez (1993), López Yepes and Titos Martínez (1995), López Yepes and Titos Martínez et al. (1999), Maixé (2003), Nadal and Sudrià (1983), Oribe (1979), Pérez Menéndez (1987), Titos Martínez (1987) and Valdaliso (2007). 4 The studies by Martínez Soto (2000), Pérez (2003), Martínez Soto and Cuevas (2004), Martínez Soto, Cuevas and Hoyo (2005), Titos and Piñal (1993) and Cals (2005) stand out. 203

4 FRANCISCO COMÍN tandable because until very recently no historian had used the minutes of the CECA board meetings and assemblies with any significant amount of scope. These collective matters are the first thing one notices when one takes the time to read said minutes thoroughly. Individual study of the savings banks, without considering their cooperative strategies, does not help towards providing a correct image of the whole savings sector. The joint strategies of the savings banks sector usually cooperatives since the creation of the CECA are not analysed in these historical studies. This disregard is a handicap because from the time of its creation, the CECA played an important role as a lobby as well as supplying financial, advertising, marketing, networking, technological and other services to the sector. In my opinion, not even the specific success of the savings banks can be understood without considering their interaction and collaboration. Its importance is such that without their cooperation, through the CECA, the mere existence of the savings banks would have been in danger, as they are institutionally fragile entities. Consequently, they depended on government regulations. Until very recently, they had always had the government s protection and tutelage. Historically, the legislation regarding savings banks has been variable and has depended on the mood of the government and its economic and social policies. Therefore, the savings banks understood that their survival depended on their capacity to carry out an efficient defensive lobby against the attacks of the banks which tried to displace them from the market using changes in the legislation (forbidding them to carry out certain banking operations) or to take them over. They were not typically capitalistic entities. They were private Foundations rather than Limited Companies so they did not have owners or shareholders and their property rights were rather undefined. The pressure groups of the business world sometimes asked for them to be «privatised». In other words, commercial banks either asked for the savings banks to be sold to banks, as in Great Britain, or asked for both the laws and statutes to be changed so they could convert them into listed public companies whose shares could then be bought up by the bnks. In the countries where savings banks were not able to organise themselves adequately, they either became legal worries or disappeared completely 5. The existing literature provides us with factors that explain the success of the savings banks in Spain. It correctly highlights a series of common characteristics the savings banks shared deriving from their condition as non-profit, charitable entities. Among others, the following factors are highlighted: proximity to the customers, territorial specialisation, inspiring confidence in their customers, use of their own strate- 5 See Comín and Torres (2003) and Pampillon (1994 and 2003). 204

5 SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) gies and instruments to encourage saving and to attract low and middle income customers, dislike of risk investments, use of profits for social projects, flexibility to collaborate with economic policies of the governments, capacity to adapt to political circumstances and changing economic opportunities and specialisation in certain banking operations such as deposits and mortgages. However, in the explanations of the success of the various savings banks, little explicit mention of the cooperation among the savings banks to defend the interests of the sector and to supply services jointly is made. Recently various research papers have appeared underlining the importance of the collaboration among the savings banks through cooperation with the CECA 6. Therefore, in this paper I intend to show that the savings banks had a predisposition for cooperation perhaps, because after 1921 they sensed that it was their only survival strategy. I also want to underline the importance of the CECA as an association of savings banks particularly in the period immediately following its creation and then as a service provider in the post 1965 period. The latter has already been dealt with by various authors 7. More specifically, in this article I would like to analyse the relationship between the collaboration among savings banks through the Confederación and their business success, measured by their share of the market. First, I will try to show that the savings banks took business away from the banks over the 20th century. I will do that by reverting to the most useful indicator which is the savings banks market share in obtaining savings through deposits and current accounts. Next, I will examine the full list of characteristics of the savings banks deriving from their institutional nature and which helps to explain this success in the growth of the market share. Finally, I will focus my analysis on the savings banks tendency to collaborate with each other through the CECA, to show that this played a huge role in the success of the sector. An additional objective of this paper is to confirm Batiz-Lazo s hypothesis that the model of competitive cooperation is applicable to Spanish savings banks. From this test, notwithstanding, comes the conclusion that the «cooperative model» has been useful for the savings banks since 1928 but, on the other hand, the «competitive cooperation model» only worked from 1989 onwards. This paper will show that cooperation among the savings banks passed through various circumstances and historical stages which made it impossible to support the hypothesis of a lineal evolution of competitive cooperation from 1928 on. I cannot maintain that this cooperation was always competitive in the markets. For 6 They include Quintás (2003), Comín and Torres (2003) and Batiz-Lazo (2004). 7 See Forniés (1978), Comín (2004, 2005 and 2006), Quintás (2003) and Comín and Torres (2003 and 2005). 205

6 FRANCISCO COMÍN most of the period of colaboration among the savings banks, from 1928 to 1988, we should speak of «collusive cooperation». Neither does the historical evidence permit confirmation of the affirmation that the savings banks were always successful in increasing their market share using that cooperative strategy. Consequently, the article consists of three sections. The second section describes the historical performance of the savings banks, examining market share records for deposits and borrowed capital since The third section looks at the savings banks characteristics which have made their good performance possible, focusing on their ability to foster private saving, to cooperate with government economic policy, to adapt to changing political, economic and financial circumstances, to specialise in certain geographical areas and to cooperate with other savings banks. This last aspect is analysed in more depth in the fourth section since it is a fundamental factor in the success of the savings banks, which channelled their cooperation through the CECA THE MARKET SHARE OF THE SAVINGS BANKS To assess the progress of savings banks in the Spanish financial system we need to look at the historical series of their share of the markets in deposits and borrowed capital. The benchmarks referred to by the savings banks in their growth strategy were always the private banks (which possessed the largest market share) and, to a lesser extent, credit cooperatives. Especially from the 1960s on, ordinary meetings of the Board of Directors of the Confederación Española de Cajas de Ahorros (CECA) analysed the «statistical data» reflecting the evolution of deposits, borrowed capital, loans and securities portfolios for the savings banks as a group and for their banking competitors. The managers of the savings banks (who were members of the Board of Directors of the CECA) attached more importance to out-performing the banks than to whether the statistics were performing well or badly 9.Market share was therefore their chief strategic indicator, against which the success or failure of savings banks was measured. 8 For the history of the CECA, see Forniés (1978, pp ), Comín (2004, pp ), Comín (2005, pp ), Comín (2006), Comín (2007), Comín and Torres (2003, pp ), Comín and Torres (2005, pp ), Torres (2005, pp ). 9 The main sources for the strategies of the savings banks and the CECA have been the collections: «Actas de las Sesiones de la Comisión Permanente», in Libro(s) de Actas de la Comisión Permanente de la Confederación Española de Cajas de Ahorros, , Madrid, Archive Secretaría General de la CECA [hereafter ASG], and «Actas de las Asambleas Generales de la Confederación Española de Ahorros, », ASG. 206

7 SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) Figure 1 shows the market share of the savings banks as assessed on two bases: data from before the Spanish Civil War (which commenced in 1936) showing the savings banks deposits as a percentage of all deposits in the banking system 10 ; the post-civil War series shows the savings banks borrowed capital as a percentage of the total for the banking system 11. The evolution of both series was very similar until the 1960s, when the savings banks began to expand their current accounts. Both series, however, show some divergences (in the period for which data are available on both) for which there are a number of explanations. The first is that the two series are based upon different primary sources. Another is that the deposits series does not include among the savings banks either the Caja Postal (state-owned) or other non-federated savings banks in other words, it only takes into account savings banks which were members of the CECA. Moreover, this series treats the Banco de España (which was the bank of issue but was a private bank like the rest and the largest of them) as part of the banking system, and therefo- FIGURE 1 MARKET SHARE OF THE SAVINGS BANKS (per cent) 60,0 50,0 40, ,0 10,0 Deposits 0,0 Borrowed capital The source is Martínez Soto and Cuevas, Estadísticas de las Cajas de Ahorros españolas ( ) (unpublished). 11 The source of this series is F. Hernangómez, Estadísticas de las Cajas de Ahorros y de la Confederación Española de Cajas de Ahorros (unpublished). 207

8 FRANCISCO COMÍN re its deposits are included in the divider. Before 1935 it was logical to include the Banco de España among the private banks since it was precisely that (it was nationalised in 1962), even though its deposits possessed particular weight in the banking system overall. During the nineteenth century, the deposits of the Banco de España generally accounted for more than half of the total; in the early twentieth century its importance began to decline, but as late as 1917 the deposits held by the Banco de España still accounted for 32 per cent; by 1921, when Cambó s Banking Act was promulgated, it was only 19 per cent, declining constantly thereafter until the years of the Second Republic ( ) when it was between 7 and 10 per cent. The decline in the importance of the Banco de España in the years leading up to 1922 was a consequence of groth of private bank deposits; thereafter, however, the cause was an ostensible increase in savings bank deposits following a downturn during the First World War. This evolution of the share of the savings banks is depicted in the two series in Graph 1. The evolution of the two series is similar in the medium term, and the real figure for the savings banks market share is probably somewhere between the two. The problem with the deposits market share series is that no figures are available for after the Civil War. Post-1918, I therefore opted to analyse the series based on borrowed capital, which is homogeneous. In this borrowed capital series we find strong growth of savings banks market share following a decline between 1918 and The gain in market share by the savings banks after 1922 accounts for the concern evinced by the private banks at savings bank expansion. The bank employers association (Consejo Superior Bancario) sought to put a brake on competition from the savings banks by persuading the dictator Primo de Rivera to approve a decree in 1926 which was designed to hamper the latter s operations. In 1928 the savings banks market share grew from 16.5 to 25.1 per cent; that same year the Confederación Española de Cajas de Ahorros was set up as an association for the purpose of lobbying on behalf of the sector and trying to counter pressure from the banks. In fact the CECA succeeded in having the 1926 decree reformed and a Savings Statute which was more favourable to the savings banks approved in The savings banks market share dropped in 1929, but from 1930 to 1933 it recovered, rising to 26.7 per cent. That year saw the approval of a new Savings Statute, and also the creation of the Instituto de Crédito de las Cajas de Ahorros [Savings Bank Credit Institute], which was intended to serve as a coordinating body for the financial activity of the savings banks 12. At the end of 1935, the market share of the savings banks stood at 26.9 per cent. The 1920s, then, 12 See Fernández Ramos (2006). 208

9 SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) were good years for the savings banks, as were the early 1930s albeit to a lesser extent; in the space of ten years, their market share grew by ten points. In fact, before the start of the Civil War, the savings banks handled more than a quarter of the market in deposits 13. As Figure 1 shows, all the inter-war gains were lost after the Civil War and the advent of the Franco dictatorship. Indeed, by 1942, the market share of the savings banks had fallen to 16.7 per cent, the same level they had attained in The savings banks did not begin to recover market share until 1946; from then until 1952 it rose to 21.3 per cent, remaining stable until Thereafter they saw renewed growth, from 22.4 per cent in 1957 to 24.7 per cent in Note that at this point they had not yet recovered their pre-civil War level in other words, the autarchy phase of the Franco regime was a poor one for the savings banks. Between 1939 and 1957, it was all the CECA could do to fend off the threats assailing the savings banks; indeed, the Ministry of Labour (under whose supervision they operated as charitable institutions) tried on several occasions to exert control over the savings banks investments and all their social projects 15. The savings banks deposits did not regain their pre-war level until 1966; in other words, they took thirty years to recover from the economic disaster of the Civil War and the post-war period. Whatever the level of savings, the savings banks clearly fared much worse than the private banks during the period of autarchy. The savings banks did not therefore break through their pre-war market share ceiling until the 1960s. Their growth in those years was influenced by a number of factors. The first was the economic policy of the new Franco government, which was more intent on economic growth and hence saw it as essential to raise the rate of saving. Franco s governments used the savings banks for that purpose and, as a result, things began to change for them in 1957 when they exchanged the oversight of the Ministry of Labour for that of the Ministry of Finance. Thereafter, they were treated more as financial institutions than as charitable organisations 16. The Ministry of Finance was interested in enhancing the power of the savings banks to attract savings, subsequently forcing them to invest in the financing of whatever public and private enter- 13 Based on the other series from Martínez Soto y Cuevas, «Estadísticas...», the market share of the savings banks would have been a fifth of the total. 14 Compared with the Martínez Soto y Cuevas series «Estadísticas...», the decline in the Hernangómez series («Estadísticas...») is smaller. It should be remembered, however, that these are two unlike series and that had the first continued after the Civil War it would have given even lower post-war percentages. 15 «Acta de la Sesión de la Comisión Permanente [hereafter ASCP], 7/4/1960», Libro de Actas de la Comisión Permanente de la CECA [hereafter LACP], 6, , Madrid, CECA, Archivo de la Secretaría General [hereafter ASG]. 16 ASCP, 11/12/1957, LACP, 6, , ASG. 209

10 FRANCISCO COMÍN prises the government determined, through mandatory investment coefficients 17. The second factor in the development of the savings banks was economic growth in the 1960s; this drove growth in the income of wageearners and the middle classes with nationwide industrialisation and urbanisation, and these were natural customers for the savings banks 18. This development was good for the latter, which in 1971 achieved a market share of 32.7 per cent, another milestone in their historical progress. A third factor accounting for their growth was that the CECA began to provide them with certain financial and other services which had hitherto been provided by the ICCA, only less efficiently 19. Between 1972 and 1981 the savings banks market share remained practically stable at between 30 and 33 per cent. In other words, the economic and banking crisis prevented the savings banks from advancing positions. However, they did not lose ground either at a time when international banks began to operate in Spain, growing to absorb the ground lost by the bankruptcies of Spanish commercial banks in the economic crisis. The savings banks weathered the crisis better than the private banks, as seen in the fact that no savings banks folded and there was hardly any call on the Savings Bank Deposit Guarantee Fund to bail out savings banks, unlike the Bank Deposit Guarantee Fund 20. Subsequently, the savings banks achieved very strong growth between 1981 and 1988, when their market share reached 44.5 per cent. With the recovery from the economic crisis and liberalisation of the financial system starting in 1977, the savings banks were able to win market share from the commercial banks. One particularly important government measure was Decree 2290 of 1977, which introduced organisational changes in the savings banks (democratisation of their Corporate Governance boards) and allowed them to undertake the same financial transactions as the banks 21. In 1977 savings bank operations began to be brought into line with those of banks, so that they were able to compete in the market on equal terms. Between 1988 and 1991, however, the market share of the savings banks stagnated. There were a number of reasons for this. The first was the application in 1985 of the Savings Bank Governance Boards Act (Spanish acronym LORCA, Ley de Órganos Rectores de las Cajas de Ahorros), under which savings banks were forced to replace most of their senior managerial staff. The second was the abolition of the territorial principle, which intensified conflict between savings banks as they were allowed to compete in all regions of 17 ASCP, 29/1/1964, LACP, 7, , ASG; ASCP, 24/10/1964, LACP, 7, , ASG. 18 ASCP, 4/2/1960, LACP, 6, ; ASCP, 17/2/1972, 8, , ASG. 19 ASCP, 1/12/1971, 8, , ASG. 20 Quintás (2003, pp. 1-26). 21 ASCP, 19/10/1977, ASG. 210

11 SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) Spain 22. The third was that during those years, competition among savings banks sidelined cooperation; and in fact at that time there was some instability in the CECA (which underwent a severe crisis) and numerous disputes between savings banks. This explains why it was not until 1992, once a new equilibrium had been established among the savings banks and the Confederation organised to continue the strategy of cooperation among savings banks in a new context, that their market share saw significant new growth, reaching 50.2 per cent in Having achieved this position, the challenge was now to retain it. Nevertheless, after 1996 they continued to expand, if at a slower rate, peaking at 53.6 per cent in the year In other words, today the savings bankshave a larger share of the Spanish banking market than the private banks. Over the long term, between 1965 and 2001 the savings banks doubled their market share in terms of family and business deposits, certainly a historic achievement. In fact this was one of the most important structural changes in the financial market in the last third of the twentieth century. Also, the expansion of the savings banks occurred largely in the wake of the advent of democracy and the Fuentes Quintana (Vice- Premier for Economic Affairs) decrees of 1977 which liberalised the financial system. This means that the savings banks also performed better in competitive financial markets than when their activity had been hampered by the financial constraints imposed by the Franco regime. During this period of growth the savings banks lacked any kind of legal advantage and received neither assistance nor subsidies from public bodies. The explanation for this gain in market share lies in the fact that savings banks enjoyed clear competitive advantages over Spanish and foreign commercial banks and credit cooperatives CHARACTERISTICS OF THE SAVINGS BANKS The nature of the savings banks is at the root of some of the operational characteristics which have enabled them to compete with private 22 «Acta de la Sesión Ordinaria del Consejo de Administración de la Confederación Española de Cajas de Ahorros» [hereafter ASOCA], 28/4/1986, ASG. 23 Similar conclusions are reached if, instead of the market share of the deposits, other variables are used. These variables could be the share of bank offices or employment in the savings sector to compare with the total of the banking sector. Nevertheless, using the market share of some of the assets, such as credits, is not appropriate in the central period, from 1933 until well into the 1980s. The reason is that between these dates the asset operations of the savings banks were determined by the coefficients of obligatory investment fixed by the Ministry of Finance. savings banks did not have freedom of action to place their investments, so they could not compete with commercial banks in this field. See Comín (forthcoming). 211

12 FRANCISCO COMÍN banks and lay the foundations for their successful gain in market share over the last few decades. These characteristics are: 1) their capacity to encourage and attract popular saving i.e., manual workers, whitecollar workers and the middle classes ; 2) their cooperation more or less forced with governments to channel these funds towards certain economic and social objectives, which undoubtedly encumbered them to some extent but also brought a number of undeniable advantages; 3) their flexibility in adapting to changing political, economic and financial circumstances; 4) their strong territorial roots in the various parts of the country; 5) their contribution to economic growth and social wellbeing, which strengthened the esteem and loyalty of their customers; and 6) cooperation and solidarity among the savings banks, which enabled them to achieve economies of scale (political, technical, financial and mercantile) without needing to merge to grow 24. To start with, the capacity of the savings banks to encourage and attract popular savings was achieved thanks to a business strategy which successfully gained acceptance among the middle and working classes. The growth of the strong roots laid down in this segment of the financial market was made possible by the creation of new financial instruments to attract small savers (interest-bearing deposits and deposit passbooks), by novel commercial strategies (advertising campaigns promoting savings, and incentives such as prizes, lotteries and free gifts), and by their orientation towards charity and social spending as a way of distributing net profits after allocations to reserves. Indeed, the savings banks carried out an essential function in fostering and attracting savings, in a specialised manner, among the middle and lower classes by means of strategies normally associated with what came to be known as «retail banking» 25. The savings banks certainly stimulated saving among the working and middle classes, drawing into the financial circuits a considerable portion of the population, who subsequently remained loyal to them. In the beginning this helped consolidate the social order due to the fact that savers viewed their deposits as a property that they had to defend, and the savings banks thus came to serve as counter-revolutionary institutions, as was intended when they were created in the nineteenth century. In the twentieth century the savings banks continued to help instil a culture of saving, through promotional messages and their methods of paying interest on deposits. In the mid 1960s the savings banks began to reach out to customers in the upper middle clas- 24 See Cals Güell (2005), Comín (2008), Martínez Soto y Cuevas (2004) and Pérez (2003). 25 In fact the savings banks developed techniques of their own to attract popular savings savings pass-books, draws and prizes and a communication strategy that was readily grasped by the targeted sectors. For an analysis of the nature and functions of the savings banks, see Revell (1989). 212

13 SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) ses by offering specific products (current accounts and cheque books) and through publicity tailored to the segment 26. In second place, the savings banks were receptive to government guidelines and regulation from the outset, and they enjoyed some advantages in return. In the nineteenth century they were viewed as charity institutions and their activity was regulated by the government; in return they enjoyed certain fiscal advantages. In 1904 they began to cooperate with the government on social policy. In 1957 the government began to view the savings banks as financial institutions with the capacity to channel funding into public investment projects. Later, in 1977 it began to view them as an instrument through which to introduce competition in financial markets. To enable them to accomplish these financial tasks, in 1957 the government began allowing them to expand their operations to attract liabilities and started approximating their status to that of the banks including taxation, so that the savings banks gradually lost their fiscal privileges. As for asset operations, the investments made by the savings banks were regulated by the state. From the time of the decree of 1835 until 1880, Spanish governments obliged the savings banks to invest their funds in the financing of the public pawnbroking establishments known as Montes de Piedad. Thereafter, they were allowed more freedom to invest, until 1933 when the Savings Statute forced them to invest a percentage of their deposits in public debt. During the Franco years the savings banks were obliged to invest most of their borrowed capital in public debt issues and bonds of private companies, and to grant loans to certain sectors. Only after 1977 was investment by savings banks liberalised, and hence until the 1980s the savings banks asset operations were regulated, more or less strictly, by government-imposed financial repression. This caused the savings banks to exercise special prudence in their investments and constituted a guarantee for depositors; and the consequent solvency of the savings banks undoubtedly attracted more customers. They were able to indulg this aversion to risk over the long term because of their status first as beneficent institutions and later as private non-profit foundations, and thus they were sheltered from the temptation of risky speculative investments which wiped out some private banks in times of financial crisis. To all of this we must add the consistent honesty of patrons, management and personnel, whose stability was essential to the efficient running of the savings banks. On the other hand their subjection to state and post-1977 regional regulation constituted a brake on their financial activity until compulsory investment coefficients disappeared in the 1990s. The way in which the political significance of the 26 See Comín and Torres (2003). 213

14 FRANCISCO COMÍN savings banks varied according to the historical circumstances is clearly illustrated by the list of Ministries Interior, Labour and finally Finance by which they were regulated and supervised over the years. They started up as entities created to contribute to public charity as a means of maintaining law and order, and as such they were controlled by the Ministry of Interior in the nineteenth century. Next they became instruments of new government social policies, and therefore were placed under the tutelage of the Ministry of Labour in the 1920s. And finally they came to be viewed as standard financial organisations whose chief function was to act as intermediaries between savers and the public bodies to which they were obliged to entrust part of their investments, rising from 30 to 60 per cent of borrowed capital in 1951 and then to 80 per cent after This is the reason why they eventually came under the wing of the Ministry of Finance. In third place, the savings banks have shown a striking ability to adapt in response to the difficulties posed by changing economic circumstances, and above all by swings in government policy as regards their regulation. Spanish governments historically made the savings banks live in a perpetual state of insecurity, a situation which honed their capacity to survive. The flexibility with which savings banks have been able to adapt to shifts in the environment is reflected in their remarkable evolution. They began life as financial adjuncts of the old Montes de Piedad, designed to attract savings with which to finance the secured loans that these gave to the poorer classes in the nineteenth century. When in the late nineteenth century the deposits attracted by the savings banks began to exceed the capacity of the Montes de Piedad to absorb them, they were forced to start seeking alternative investments and began to specialise in security-guaranteed collateral loans, mortgage loans and acquisition of securities. Then, when the Welfare State began to take shape in the early twentieth century, the savings banks helped to finance social welfare activities, chiefly social insurance and cheap housing. Later on, during the autarchy period of the Franco regime, the savings banks were used to finance a state with a shoestring budget due to the absence of any modern tax reform; the savings banks were also used to finance a number of autonomous boards and public enterprises which received special funding, promised by the state but provided in a mandatory way by the savings banks. Also, under Franco the social projects of the savings banks were entirely controlled by the Ministry of Labour to finance the government s social policy. Growth in the sixties enabled the savings banks to expand their operations thanks to growing deposits and to diversify them through the new missions assigned them in the Development Plans set in motion in 1964 and subsequent years. And finally, with the advent of democracy and theconsolidation of the welfare state, which was at last 214

15 SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) able to finance public investment and social and redistributive spending thanks to the reform of 1978, the savings banks were able to acquire the status of financial institutions, operating on equal terms with the banks albeit while still retaining their charitable and social goals. They were then used to inject competition into the banking system, and it was thanks to that service that they achieved operational equality with the banks. Moreover, with political freedom the savings banks achieved sufficient efficiency to make rapid gains in market share. It was in situations of political freedom, which returned to Spain after the death of Franco, and competition in the financial market, introduced in 1977, that they historically performed best, as we have seen. However, their ability to compete was no improvised matter but something built up in the past. In fact the savings banks achieved a notable degree of financial solvency and managerial capacity while they were compelled to operate within very severe constraints, in the difficult years when they played second fiddle to the banks. In fourth place, the territorial aspect has been fundamental in that the savings banks have always been identified with their towns and provinces of origin. Thanks to their geographical specialisation they have traditionally had a better knowledge of local markets and the peculiarities of savers in a particular region. Moreover, being closer to their creditors has enabled them to reduce the risks involved in lending. With their investments the savings banks have helped to lend cohesion to certain communities or regions and to stimulate economic growth there. This territorial function has been a constant regardless of whether the founders were private individuals or most commonly municipal or provincial bodies. In the savings bank sector the territorial principle applied until This meant that savings banks could not open branches outside their own areas of operation. During the Franco years, plans for expansion and for the opening of new branches required government approval and were confined to their own areas of operation. With the passage of time, however, the savings banks expanded their areas of operation through mergers and takeovers. As from 1985, they were allowed to open branches in certain provincial capitals outside their own areas and finally, in 1989, they were given freedom to expand anywhere within the national territory. As a result, they were able to extend their operations to other regions, but even today the two largest savings banks, which operate throughout the country, still tend to specialise in their traditional areas. In fifth place, the savings banks have mobilised large volumes of funds and have expanded Spain s financial markets. In that sense they 27 ASOCA, 18/3/1985, ASG. 215

16 FRANCISCO COMÍN have been instrumental in stimulating the country s economic growth and social well-being. As we have seen, application of the savings banks resources made it possible to finance the consumer needs of the poorer classes in the nineteenth century; it enabled them to contribute to the funding of social welfare and government spending between the beginning of the twentieth century and the 1970s through acquisition of public debt and compulsory investment coefficients; and later on the savings banks credit operations enabled people to acquire consumer durables and housing, made resources available to small and medium enterprises and helped towns to expand their fixed and cultural assets. All this helped improve the image of the savings banks among customers and has been one of the keys to their success. In sixth place, the most important factor in the success of the savings banks has been mutual cooperation. Since the foundation of the CECA in 1928, through cooperation they have managed to lobby effectively to influence government legislation. Moreover, since the creation of the ICCA in 1933, cooperation has enabled the savings banks to achieve economies of scale and to network for commercial, financial, advertising and technological purposes. Such collaboration was not easy to achieve, and indeed it was attained despite the heterogeneous nature of the savings banks in terms both of size and balance-sheet structure and of competitive strategies, especially following the onset of liberalisation with the advent of democracy 28. The origins of the CECA can be traced back to 1904 but it did not come into being until The creation of the National Banking Council (Consejo Superior Bancario CSB ) was one of the factors that triggered cooperation among the savings banks. The CSB was an official association of banks created by Finance Minister Cambó by virtue of the Banks Organisation Act of 1921 (Ley de Ordenación Bancaria). This Act was intended to turn the Banco de España into a genuine central bank, but it stopped short, failing to set up the necessary tools with which to implement a modern monetary policy independent of the Ministry of Finance; it did not define open market transactions and it lacked the autonomy to set interest and exchange rates. The banking crisis of the 1920s showed that the Banco de España also did not act as a lender of last resort, allowing several floundering 28 The creation of an association of savings banks came later in Spain than in other European countries, where savings bank associations began to spread in the late nineteenth century; national associations (or federations) of savings banks came into being in the following years: Germany in 1884, Great Britain in 1887, Sweden in 1900, Austria in 1905, Denmark in 1905, Finland in 1906, the Netherlands in 1907, France in 1911, Italy in 1911 and Norway in See Wysocki (1996, pp. 9-25). For the history of savings banks in European countries, see L. Américi (2002, pp. 5-19), Bonin (2005, pp ), Hertner (1996, pp ), Mura (1996, pp ), Ross (2002, pp ), Ross (2005, pp ), Ó Gráda (2001). 216

17 SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) banks to go to the wall. It did come to the aid of the Banco Central in 1924, but that was because the dictator Primo de Rivera forced it to, the board of directors of the Banco de España having earlier decided the opposite 29. The Banks Act of 1921 was successful in legally compartmentalising the financial system, establishing a strict division between banks and savings bnks which lasted until However, it placed the banks at a distinct advantage, allowing them to carry on running sections known as «cajas de ahorros». Moreover, the Act discriminated against the financial activity of the savings banks, another factor that stimulated the tendency of the latter to associate. The Cambó Act legalised the banks cartel, organising it officially as a new, quasi-public body called the Consejo Superior Bancario (CSB). Like any organised cartel, the CSB sought to corner the market for members of the oligopoly, leading rapidly to the establishment of an aggressive corporate strategy against the savings banks; these were proving highly competitive, particularly in the wake of the bank crashes of the 1920s, which handed the banks customers to the savings banks on a plate. The response of the latter was naturally to imitate the banks and organise corporatively. But in this sector of savings, the movement towards association did not at the outset enjoy official support; it was a spontaneous and defensive movement, initially centred on regional federations, which subsequently confederated. The movement for association of the Spanish savings banks was supported by the International Savings Bank Institute founded at the First International Savings Congress in Milan in 1924, which several Spanish savings banks attended 30.Ultimately, however, the fundamental event giving rise to the creation of the CECA was the Royal Decree-Law of the Military Directorate (1926). Inspired by the CSB, it forbade savings banks to undertake certain transactions, from the opening of current accounts to transfers of funds. To try and prevent this decree from taking force, the savings banks created the CECA. Thus, with the creation of the Confederación Española de Cajas de Ahorros in 1928, the banking market became a competitive «duopoly» of associations in which the struggle between the two cartels was extremely bitter until very recently. This antagonism passed through various phaes, and the savings banks progressed from a very difficult initial situation to one in which they progressively gained ground until they won equal status 29 According to Martín Aceña (1984). For the history of Spanish commercial banks, see Comín and Martín Aceña (1996, pp ), Pérez (1997), Pons (2001, pp ), Pons (2002), Martín Aceña and Pons (2005, pp ). 30 There were representatives from the Caja Postal and the Cajas de Ahorros of Madrid, Barcelona, Saragossa and the province of Guipúzcoa. For an overview of savings banks in the world in the 1930s, see Instituto Internacional del Ahorro, «las Cajas de Ahorro en el mundo», Etapa, 6 (1938, pp ). 217

18 FRANCISCO COMÍN with the private banks in In other words, the CECA took half a century to win back the operational equality that the savings banks had lost in The CECA played an essential role, first of all in recovering lost ground and the business that the banks had initially tried to wrest from the savings banks, then later in expanding the range of their activities as financial institutions. At the outset, the CECA concerned itself mainly with lobbying to defend the savings banks traditional sphere of activity against the aggressive inroads of the banks in popular savings, and with the efforts of the CSB to prevent the savings banks from engaging in a number of commercial activities without which no banking business was properly balanced. Following the creation of the ICCA in 1933, the savings banks began to cooperate in the financial sphere 31. From this author s point of view, this last aspect of cooperation was essential to the success of the savings banks, and it is therefore discussed in more detail in the following section. 4. THE COMPETITIVE COOPERATION MODEL Conventional economic theory holds that economic resources may be allocated either through market competition or through the internal hierarchy of the enterprise. But economic history and more complex theoretical studies have demonstrated that there are mixed forms of resource allocation combining market and firm. Examples include quasi-integration of companies through long-term contracts and competitive cooperation agreements between firms which formally retain their independent legal status. Competitive cooperation among financial institutions is normally a response to external changes in markets, produced mainly by major reforms of regulatory policy and to technological innovations. In some circumstances it is possible to achieve greater competitive capacity by means of competitive cooperation through renewable agreements than by means of quasi-integration, which requires long-term agreements between companies. Also, competitive cooperation is particularly efficient in contexts where political factors make inter-company integrations difficult or impossible. Moreover, competitive cooperation is an especially suitable organisational form for situations where markets are in any way geographically compartmentalised; such cooperation can sometimes be a good alternative to geographical expansion through integration with other entities located in different geographical areas, and it is also less costly and less risky than opening branches See Comín and Torres (2003). 32 See Bátiz-Lazo (2004, pp ). 218

19 SPANISH SAVINGS BANKS AND THE COMPETITIVE COOPERATION MODEL ( ) Competitive cooperation is one of the more imaginative entrepreneurial responses to be developed in the twentieth century; it expanded fastest in the second half of the century, but even so it never came into very wide use. Competitive cooperation consists of the sealing of strategic alliances between several institutions, financial or otherwise, which agree to act in concert in certain activities in order to attain the critical mass they need to compete in the market. The fundamental reason for agreements of this kind is that such entities cannot attain that threshold of efficiency on their own. These agreements are temporary and can embrace numerous different aspects, from cooperation in research to joint contracting of services and simultaneous marketing of jointly-developed products. Cooperation among companies makes it possible to improve information resources, share business experience, and also reduces the risk element in certain kinds of investment, for instance in technologies characterised by a high degree of uncertainty and rapid innovation. Among other things, these inter-company agreements make it easy for partners to learn from one another, thus facilitating the development of a capacity to adapt to changing circumstances and contexts. Cooperation can help to get round legal and technical restrictions affecting access to markets, and to challenge firms operating in markets that would otherwise be unassailable. In markets with imperfect competition and monopoly or oligopoly situations, competition can be neutralised by a number of factors: 1) the existence of legal, technical or promotional barriers; 2) conditions favouring collusion among companies and a reduction in their numbers through mergers; 3) the existence of high sunk costs, constituting high exit barriers deterring potential competitors from entering the market. Cooperative competition, then, can serve to break down some of the barriers to both entry to and exit from a market. In the first case this is done by cooperatin to attain a size that will enable the partners to achieve efficiency in the spheres of technology or promotion. In the second case it is done by strategic planning to anticipate the competitive advantages, or share the risks, of investments in technology. Of course cooperation can also be a means of securing advantages in negotiations for changes in the law that will break down the legal barriers to competition. Like any other kind of market organisation or strategic business arrangement, the practicality, and above all the success, of competitive cooperation requires that a number of conditions be met. One fundamental prerequisite is that the partners have clear objectives and shared expectations. In this way the benefits can be clearly set forth and the costs of the agreements fairly distributed. The greater the similarity between the partners, the simpler it will be to reach similar levels of commitment between them. This is essential in that the degree of success of 219

20 FRANCISCO COMÍN the cooperation will depend on the commitment made by the parties involved. This explains why alliances for defensive purposes are more likely to succeed than those envisaging offensive cooperation in the face of competition. And again, cooperation is more likely to succeed if the organisations concerned have had some kind of previous contact, or better still some previous shared activity. Finally, the formation of cooperative alliances can provide a bridge for the promotion of mergers entailing business integration 33. Although only briefly outlined here, this is the model that Bátiz-Lazo (2004) uses to provide a convincing explanation for the success of the Spanish savings banks since However, the reality of competitive cooperation is far more complex when viewed from the broader historical viewpoint. In fact, the historical process which culminated in the success of the savings banks was not an uninterrupted one but a succession of steps forward and steps back. Also, the negotiations among them were considerably more complex than all those highly attractive theories might lead one to suppose. Cooperation among savings banks in fact began even before the creation of the CECA, and these previous experiences indubitably contributed to the success of the creation of the CECA in 1928 for the purpose of lobbying to break down the legal entry barriers imposed by the state in 1926 at the instigation of the banks. savings banks began to collaborate financially with the creation of the ICCA in 1933, whose object was to facilitate cooperation to achieve mobility of savings between different areas and to enhance their capacity to negotiate in capital markets. And finally, cooperation in the offer of services and in technological innovation came in the 1960s. On the other hand, competition among themselves to obtain deposits or credits in the market did not always accompany associative cooperation among savings banks in Spain. On the contrary, until 1989 institutional collaboration between savings banks was accompanied by some collusive agreements (at local, provincial, regional and national levels) to divide the markets up and to avoid competition in winning over customers. Until that year, we would therefore have to speak of «collusive cooperation» or of «total cooperation» in all ambits. Between 1928, when the CECA was created, and 1977, the Spanish financial system was highly regulated by the state including questions of territorial expansion where the main competitive elements of savings banks and commercial banks were located. After the Civil War, they could not compete on prices because the government fixed the interest rates. The financial institutions could not increase them to attract customers to open accounts. Under Franco s regime, savings banks and commercial 33 See Bátiz-Lazo (2004). 220

Keynote Address Roger W. Ferguson, Jr. Understanding Financial Consolidation I t is my pleasure to speak with you today, and I thank Bill McDonough and the Federal Reserve Bank of New York for inviting

1. The financial crisis of 2007/2008 and its impact on the UK and other economies Do you still feel vague about the causes and the effects of the financial crisis of 2007/8? Are you preparing for a job

REQUIREMENTS FOR OBTAINING A BANK OR FINANCIAL INSTITUTION LICENSE The business of banks (or credit institutions ) and financial institutions is regulated by directive No. 2006/48 EC of 14 June 2006 ("the

Notice RESTRUCTURING OF SPANISH SAVINGS BANKS Situation at 29 June 2010 I. Introduction With the four merger plans approved earlier today by the Banco de España, the restructuring of the Spanish savings

09.02.2016 An outlook on the Spanish economy Official Monetary and Financial Institutions Forum (OMFIF), London Luis M. Linde Governor I would like to thank OMFIF and Mr. David Marsh for the invitation

Credit Unions and their strong competitors in Spain: Saving Banks Cajas de ahorros Elizabeth Aro Sofia, March 2009 The cooperative banking sector in Spain represents only a small part of the whole banking

Spain Spanish Tax Issues in Debt Restructurings: The Tax Treatment of Cancellation of Debt Miguel Lorán* The author reviews the Spanish tax treatment of the cancellation debt that may take place when debt

Public consultation on the possibility for an investment fund to originate loans The purpose of this consultation is to gather the opinions of all interested parties about the possibility for French investment

Growth and Employment in Organised Industry C.P. Chandrasekhar and Jayati Ghosh There is a general perception of industrial dynamism in the Indian economy at present, fed by reasonably high, even if not

EUROPEAN COMMISSION Internal Market and Services DG MARKT/ 19.07.2007 CONSULTATION ON A POSSIBLE STATUTE FOR A EUROPEAN PRIVATE COMPANY (EPC) Consultation by the Services of the Internal Market Directorate

FINANCIAL INCLUSION: ENSURING ACCESS TO A BASIC BANK ACCOUNT CONSULTATION DOCUMENT - COMMON RESPONSE Question 1: Do you share the Commission's overall objective to ensure that, by a certain date, every

Mario Draghi: Europe and the euro a family affair Keynote speech by Mr Mario Draghi, President of the European Central Bank, at the conference Europe and the euro a family affair, organised by the Bundesverband

Errors and omissions in the balance of payments statistics a problem? BY GUNNAR BLOMBERG, LARS FORSS AND INGVAR KARLSSON The authors work in the Monetary Policy Department. The balance of payments statistics

EUROPEAN FREE TRADE ASSOCIATION ASSOCIATION EUROPEENNE DE LIBRE-ECHANGE CSC 9/98 21 October 1998 Brussels An Opinion from the EFTA Consultative Committee The Impact of the Common Currency on European Economies,

Definition of Public Interest Entities (PIEs) in Europe FEE Survey October 2014 This document has been prepared by FEE to the best of its knowledge and ability to ensure that it is accurate and complete.

organizations funded by the state budget, other units of state importance, and certain public facilities. The main authority responsible for the implementation of the Second Privatization Program and coordination

Santander in the world Santander in Olive trees more than 1,000 years old at Grupo Santander City, Boadilla del Monte, Madrid The results of clearly show the Bank s capacity to solidly weather this difficult

Summaries of the proposal from the Swedish Committee on Corporate Taxation This document contains a two-page executive summary and a sixpage full summary of the main proposal from the Swedish Committee

Mr Duisenberg discusses the role of capital markets and financing in the euro area Speech by Willem F Duisenberg, President of the European Central Bank, at the Waarborgfonds Sociale Woningbouw in Utrecht,

SECOND ANNUAL MEETING of the LATIN AMERICAN COMPETITION FORUM June 14-15, 2004 Inter-American Development Bank Andrés Bello Auditorium Washington, D.C., United States TRINIDAD AND TOBBAGO: Institutional

CNP Assurances signs a longterm strategic partnership in insurance in Europe with Banco Santander 0 th July 04 Disclaimer «Some of the statements contained in this document may be forward-looking statements

Equity or debt govern tax highlights of foreign investment Juan Pablo Navarrete and Manuel José Garcés of Carey y Cía explain that depending on whether it is through equity or debt, an investment in Chile

COUNCIL OF MINISTERS DECREE LAW 17/09 OF 26 JUNE Whereas the training of Angolan staff is one of the tasks within the set of priorities of the Government and in view of the need to provide the Republic

The Effects of Funding Costs and Risk on Banks Lending Rates Daniel Fabbro and Mark Hack* After falling for over a decade, the major banks net interest margins appear to have stabilised in a relatively

Types of Business Organisation Revision Presentations 2004 Introduction A business is always owned by someone. This can just be one person, or thousands. So a business can have a number of different types

What is responsible for the easing of credit standards before the crisis: monetary policy or the savings glut? Adrian Penalver Monetary and Financial Analysis Directorate This letter presents the findings

Many Banks and Thrifts Overly Reliant on Hot Money Deposits: Why an FDIC Coverage Increase to $250,000 May Not Stop Bank Runs and Could Cause Other Collateral Damage Submitted by Martin D. Weiss, Ph.D.

BancoEstado s social role and expanding banking services The story of a successful state owned bank In Pica, a small town in Chile s northernmost first region, the only way that 10,332 people can access

TAXATION OF BANKS AND OTHER FINANCIAL CORPORATIONS 241-1 CHAPTER 241 TAXATION OF BANKS AND OTHER FINANCIAL CORPORATIONS Section 241-1 Definitions 241-1.5 Time of application of tax and other provisions

English Translation of Finance Companies Control Law Article 1 Introductory Chapter Definitions The following terms and phrases wherever mentioned in this Law shall have the meanings assigned thereto unless

The 's credit register for loans of 3 million Deutsche Mark or more Changes in the reporting procedure The credit register maintained by the Deutsche records all loans of three million Deutsche Mark or

Summary and conclusions This report describes the instruments by which the respective authorities of eight important European Union members control the building, financing and geographical distribution

Submission to the Inquiry into Access of Small Business to Finance march 2010 Submission to the Inquiry into Access of Small Business to Finance Introduction The submission is in two sections reflecting

Introduction to the New Company Law of the People s Republic of China Author: Steven M. Dickinson Harris & Moure I. Introduction On October 27, 2005, the People s Republic of China adopted a new Company

The regulatory regime of Exchange traded funds in the European Union Eddy Wymeersch University of Gent Exchange traded funds have become an essential part of our financial landscape: they stand globally

The opportunities offered to foreign investors by the Chinese mergers and acquisitions market are increasing every year: in 2010, transactions involving foreign companies came to 60.1 billion euros, an

We Need to Prepare Ourselves for Higher Interest Rates Summary If deflation continues to be coming to an end in Japan, then interest rates are expected to rise significantly in the mid- and long-terms.

FOR RELEASE ON DELIVERY STATEMENT BY STEPHEN S. GARDNER, VICE CHAIRMAN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM BEFORE THE SUBCOMMITTEE ON TAXATION AND DEBT MANAGEMENT OF THE COMMITTEE ON FINANCE

Key issues in bank lending Introduction Welcome to Keynotes. Keynotes is a monthly event and publication to help early stage businesses get to grips with key legal issues. A bit about us Keynotes is brought

Consultation on the future of European Insolvency Law The Commission has put the revision of the Insolvency Regulation in its Work Programme for 2012. The revision is one of the measures in the field of

Chapter 1 The Scope of Corporate Finance MULTIPLE CHOICE 1. One of the tasks for financial managers when identifying projects that increase firm value is to identify those projects where a. marginal benefits

UNOFFICIAL TRANSLATION Explanatory Memorandum Article 1, paragraphs 491 to 500, of Law No 228 of 24 December 2012, hereinafter referred to the Law, has introduced a tax on financial transactions applying

CONSUMER PROTECTION ON THE SALE OF LOAN BOOKS Public Consultation July 2014 Public Consultation Paper: Consumer Protection on the Sale of Loan Books Department of Finance July 2014 Department of Finance

The euro area bank lending survey First quarter of 216 April 216 Contents Introduction 3 1 Overview of the results 4 2 Developments in credit standards, terms and conditions and net demand for loans in

Richard Turton Award 2009 The Legal Position of an Assignee in Assignor s Insolvency Yana Hankovic Sponsored by The Legal Position of an Assignee in Assignor s Insolvency Belarusian law does not recognize

The Positive Role of Audit in Public Debt Management in China (for the 1 st ASOSAI-EUROSAI Joint Conference) September 2011, Turkey By Dr. DONG Dasheng, the first Deputy Auditor Introduction Since 2008,

Comments to the new EU regulation on insolvency proceedings Insolvency of members of a group of companies Alberto Díaz Moreno Professor of Corporate & Commercial Law, Universidad de Sevilla Academic Counsel,

BUDGET SYSTEM LAW I. GENERAL PROVISIONS Subject of the Law Article 1 This Law shall regulate: planning, preparation, adoption and execution of the budget of the Republic of Serbia; planning, preparation,

Chapter 1 Legislative Background and Tax Reform The Chinese tax system has recently developed closely to the economic growth of the country. The entry of China into the World Trade Organization (WTO) and

ALVAREZ DE NOVALES, José Mario Challenges for Corporate Strategies in the New Economy Abstract: A situation of uncertainty is arising around the new economy insofar as it entails confronting two models,

Directors and Officers Liability Insurance Guidance and Advice for Risk Managers The insurance market has responded to recent corporate failures by requiring more information from organisations seeking

FROM GOVERNMENT DEFICIT TO DEBT: BRIDGING THE GAP Government deficit and debt are the primary focus of fiscal surveillance in the euro area, and reliable data for these key indicators are essential for

Mexico Rodolfo Trampe, Jorge Díaz, José Palomar and Carlos López Market overview 1 What kinds of outsourcing take place in your jurisdiction? In Mexico, a subcontracting regime (understood as the regime

CONSULTATION ON PROMOTING SOCIAL INVESTMENT FUNDS AS PART OF THE SOCIAL BUSINESS INITIATIVE European Commission s Consultation Response by RESEAU FINANCEMENT ALTERNATIF Chaussée d'alsemberg 303-309 1190

Lucia P. BLĂJUȚ Doctoral School of Economics and Business Administration, Al. I. Cuza University, Iași ROLE OF INTERNATIONAL MERGERS AND ACQUISITIONS IN CORPORATE INTEGRATION Literature review Keywords

www.cudgc.sk.ca MISSION We instill public confidence in Saskatchewan credit unions by guaranteeing deposits. As the primary prudential and solvency regulator, we promote responsible governance by credit

Chapter XX Spain Carlos Paredes 1 I OVERVIEW OF GOVERNANCE REGIME i Introduction Corporate governance of listed companies in Spain is primarily regulated by the standard corporate legislation of a compulsory

EN ECB-PUBLIC OPINION OF THE EUROPEAN CENTRAL BANK of 12 November 2015 on the regulation of companies acquiring credit (CON/2015/45) Introduction and legal basis On 5 November 2015 the European Central

Systems of the Resona Group RESONA HOLDINGS, INC. Systems of the Resona Group 24 Systems Basic Approach to The trends toward financial liberalization, globalization, and securitization, along with progress